Just like the rest of the country, in Florida it is extremely important to be able to trust your real estate appraisal because appraisals, compiled by appraisers that are depended upon by many, many people to be responsible, thorough, knowledgable, and honest, give the bottom line on how much a piece of property (house, condo, townhome, undeveloped land tract, office building, whatever) is worth.

No one looks at the land, the improvements, the neighborhood, the roadways themselves in a real estate transaction; instead, they look to paperwork provided to them by a real estate appraiser. What the appraiser reports for fair market value is taken as accurate and true.

What’s going on? The banks and mortgage lenders are putting the screws to appraisers and forcing them to use market data that isn’t the best data to be used for accuracy but is the best data to use to monkey with the value of the property that is supported by that bank or mortgage lender’s mortgage. It’s happening so often they’ve even got a nickname for this con job: it’s called “FRAFing,” for “field review appraisal fraud.”

FRAFing means that the bank has a certain number that it wants for the value and the appraiser is pushed to manipulate the market values in order to get the lender the property value number that it wants. Period.

Years back, when the housing industry was blowing and going, banks would make home loans and then they would sell those loans to other banks, to private investors, or to quasi-government agencies like Fannie Mae and Freddie Mac. Historically, the bank that made the home loan kept it and that is where monthly mortgage payments were paid; things changed. A big part of the housing crisis stems from this eureka! in the financial sector, where they discovered money could be made (lots of money) by that bank selling those home loans to others – they are assets on the books, after all. (For details, read our free ebook on Foreclosure Fraud that explains things.)

Now, in a mortgage buy-back, the bank that made that home loan and sold it is being asked to buy it back. Why? The mortgage is in default. The buyer of that mortgage thinks it’s a lemon and is going back to the seller, demanding the seller to take the darn thing back.

No, no one is saying here that Bank of America in involved in FRAFing. No. Bank of America is a big, huge example of mortgage buy backs in the United States today — and a clear example of what this means.

Sure, this is fighting between banks who made home loans and banks or agencies that were so happy to buy them back before the bottom fell out of the economy. Foreclosure defense attorneys and Florida home owners who have been foreclosed upon, who are fighting with banks now to modify their mortgage, or those trying to short sell their homes – well, not much sympathy here for who gets hurt in a mortgage buy-back fight.

However, the bigger issue here is how in the midst of this fight there appears to be continued lender evildoing. Prodding, pushing, or overpowering real estate appraisers to give a bank the number it wants for a real estate value, instead of the correct and true value for the home – well, that’s just continued bad acts by the banks and mortgage lenders.

True, the appraisers are at fault for failing to do their job. Appraisal fraud is a serious thing. But more telling in what is happening here — many lenders are simply untrustworthy today. There are banks out there who just aren’t respecting the law.

I own an underwater home in Ft. Lauderdale Fl., approx. 100 grand underwater. I recently reviewed my 2005 appraisal that was used for a refi with Suntrust. The appraisal states that the home had 3 bedrooms and a built in 15 x 30 pool. This is a blatant lie . The home at issue had only 2 bedrooms and No pool. Of course adding a bedroom and a pool inflated the true value of the home. Armed with this information can a defense be mounted that could compel Suntrust bank to modify the existing mortgage to reflect today’s value of 200,000.

Wow – so you discovered flaws in your appraisal? As you know if you’ve been reading this blog, that’s just becoming a problem of epidemic proportions here in Florida.

Thanks for writing and sharing what’s going on with you. I don’t want to be frustrating here but I can’t answer specific situations in comments on the blog. Two reasons.

I worry that some other person may just assume that they can take that ball and run with any discussion we created here in comments, too, when in reality they’ve got a different set of circumstances and could get hurt by their assumption.

Also, Florida Bar Rules can be read as prohibiting my reply to your specifics in a comment as online legal advice.

I would welcome an email or phone call to chat about your question, Lou, and I’d be happy to discuss this issue with you. I just don’t want to respond here, as a post comment.